 Okay, very good morning to everyone Monday 24th of February. I hope you had a good weekend Into the briefing then I'm going to do my part with the the market fundamentals and I hand you over to Sam from the technical perspective But if you are watching this on YouTube, don't forget to subscribe to the channel but just having a look then major screen to start with of course is this of the coronavirus and not so much as what I'm showing you here, which is the total numbers and a visual graphic of mainland China, but the virus spreading to other countries is the main thing that the markets are looking at this morning and Looking at the charts across asset classes quite clear risk-off trade being seen the DAX is down over 300 points already this morning at session lows pretty much as I'm speaking The Dow is down in the futures close to 500 and that of course then a Classical kind of flight-to-quality move gold already up about $30 getting close to the overnight Electronic reopening high that we had that comes in at around 1684 that was seen in the overnight session and then the US 10 years already trading within about three ticks of the R2 Around 18 ticks this morning oil Likewise the impact that this could have the perception on global growth concerns oil from the demand Then implications that that would be is training down over one and a half dollars So quite a big move and you know for any of the the new traders This is certainly one of those reasons why in this type of environment. It's you know Very unwise to hold a position over the week weekend not knowing then Certainly the type of things that can occur and the gap in prices that you can see like of this nature so a few things to have a look at from an Information perspective and this is the overall total confirmed cases 79,000 deaths 2619 total recovered north now 25,000 However in terms of the This region we have actually seen quite a few areas where local governments in China have been Relaxing quarantine rules on plants so that they can reopen Top leaders have urged Workers to kind of return to work in China as they look to kind of get things back on track I think in terms of where they're at in that process at the moment I did see a lot of conflicting numbers of course at the moment It's hard to pin down but the actual Productivity at the moment at around tracking at 60 odd percent or so from normal rates in terms of their economy And so this is the kind of what we find ourselves in that the tricky situation between When do they fully return to work or does that risk then further risk of human to human transmission the further spreading of the disease? Is the is obviously the big question mark the biggest thing though and the reason why the markets have have taken this renewed kind of fear on the back of this Coronavirus is this this is a map now that I've moved over to Italy and Western Europe and as you can see here Italy has jumped up the the kind of leak table of confirmed cases to now Pretty much taking as a singular country the third spot So mainland China still is very much so the main epicenter if you like However in Wuhan or Hubei that province where the origination of the virus Actually numbers are leveling out It's elsewhere now and it's risk of spreading further globally that's become a key risk for markets South Korea is the other country numbers there now coming up to awards 800 Overnight the South Korean equity markets were down about three and a half percent Hong Kong Shanghai Sydney or lower as well in this risk of trade Here is it in Italy to give you a bit of context I'm sure you would have read the news already by now But here's Milan in the northern part of Italy and here's where we've had the the outbreak if you like where all the numbers have been situated within Italy now for those who did read my Kind of ramblings over the weekend in my macro menu that I write I normally publish on a Sunday I was I kind of dropped everything else and I was just focusing on the virus because of really three things That I've been monitoring and one is as what we just discussed the number of reported cases outside of mainland China What I've been looking at is basically I think markets have been fairly Okay with living with the apparent risk on the table as long as the situation was remaining Quite self-contained within mainland China the biggest risk here, of course is Kind of what we've seen change over the weekend And so that's kind of point one ticked off and then two was Statistical evidence as to the impact on global supply chains And if you remember towards the end of last week and we did finish down what in the Dow About 230 points on Friday. We're down another 550 or so this morning now One of the second point here was about the actual real Material impact it's having on supply chains because this is only going to magnify then the impact that it's going to have on the potential global slowdown Because so many different products countries Manufacturers are dependent on goods coming out of China and a bottleneck That's going to provide it's going to have substantial impact on the supply chains and we saw that remember with the UK figures on Friday Where UK suppliers delivery times index since January signaled the largest month-to-month slide in supply chain performance since surveys began in 1992 so this kind of clear evidence now which was before it was kind of a hypothetical estimate I think is quite a sea change of sentiment So number one and number two are kind of ticked number three is the one that has hasn't yet quite taken hold You could say there's a sniff of it in the air this morning But this is when it really starts to become a much bigger issue for markets And we see a real meaningful correction that's saying equities for example and gold starts going north of 1700 1750 and upwards and this would be a behavioral move this one a lot a lot harder to kind of Nail down in terms of the others of which you can of course with statistics This being the behavioral fear in the market Attributed to signs towards the development of a full-blown pandemic haven't quite got there yet But if the market decides well actually where we are way too complacent with this Which is the kind of main crux of the piece that I wrote over the weekend I do think that the market needs to reprice now for these new developments of what we've seen particularly South Korea Japan and also what's likely to create more uncertainty here is what's happening in Italy specifically because those numbers have jumped sharply very quickly So to give you actual numbers on Sunday a third Italian died from the virus as the infection count now Up to 152 up from just three. So there were three cases on Friday. There's a hundred and fifty two As of this morning. So very sharp and immediate rise that we've had So here then a few other things what are China doing? Well, China are just rolling out the normal Response in this situation and that is if you think about it, they're trying to control really point number three Which is this once the market has that that Sentiment in its head things could run away from China quite quickly in terms of the ramifications on market prices. So here China's Xi Jinping sounds alarm over virus outbreak Calling the president urging capital Beijing on call to spare no effort warning comes after local government quarantines officials and Then here China pushing factories to reopen risking renewed virus spread. So this is that that kind of The two sides of this which both also could be quite Risk-negative that being that China now Really has to start getting back to business because it's really starting to almost compound the impact by being shut down in these major Kind of manufacturing hubs and centers across China the risk, of course that they have given the nature of manufacturing plants and kind of blue-collar work is the conditions and That they work in as well as these cities which are largely and densely populated Increasing the potential for further than spreading of this virus So there's a lot of risks out there and of course the one thing that continues to outperform is gold And as we've seen this morning, we're already trading up 30 bucks and we're we're quickly closing in on 1700 and remember at the end of last week I was telling you about city group city group said that they expect gold to hit 1700 in the next six to twelve months, or how about the next Six to twelve hours. I mean that's how quickly Gold can move when it really decides to and two thousand dollars They say the next 12 to 24 months now the main point here that I thought was was quite nice Was the summary not not so much the targets Because you know these bank targets we kind of take them with a pinch of salt The main thing is is that most people are expecting more upside is the kind of baseline scenario here They said that convex macro asset market hedge a resilient during on risk ongoing risk market rallies But a better hedge during sell-offs and vol spikes and that's that thing that we were talking about Last week when we were looking at the reasoning behind it's not just The virus in that sense. It's the almost the best place as a store of a value for upside appreciation Because all of the risks at the moment are quite negative. It's how do you play that scenario out the most clean and probably Gold offers that opportunity in that respect as a hedge against potential volatility spikes Goldman Sachs pretty pretty similar. They say that low yields and weak Equities could push gold prices further towards 1750 even if the virus is contained during the first quarter Well at the moment, I'd say that contained Word is probably the one to watch not quite there yet Perhaps in China to some extent, but it's this this breach if you like outside of those Land borders that's causing the most concern to markets this morning Here was just a quick look and to finish off on this kind of overview on the virus This was a good graphic that I saw and it's in that that piece that I've written I've shared it in the chat room. This is how Coronavirus can infect global supply chains and the share of all imports of intermediate products coming from China And you can see here just how dependent the global economy economy is From China particularly in North America, which of course then is of grave concern for general broader markets given the impact on the world's biggest Most important economy that being the United States of America, of course This was another interesting thing I saw and this was looking at a couple of years of price activity if you look at the access at the bottom, but this is looking at a Decoupling of the natural kind of correlation between the Japanese yen and gold You know often people talk about how the two are seen as perceived safe haven assets while not anymore if if this is Recent price activity is to be believed you can see we're seeing a complete divergence between the two prices I mean the other thing not to forget is remember the Japanese GDP We had not so long ago with things like the typhoon that they had the sales tax hike The general implications of this virus as well on their economy, which has been stagnant You know their economy is weakening quite substantially. They're still doing large amounts of quantitative easing So you're seeing again all the more reason why people are flocking to gold and that's why you know It has seen such a stark movement of late because these other options are running out in that respect This was an interesting technical chart that I saw this was looking at the US 10-year yield and they're closing in down on record levels You can see here going back over the last pretty much 10 years US yields Tracking at where they are at the moment brings into sight the 2012 and 2016 kind of dips So we're also just keeping an eye on from that respect, but it's all about the virus this morning and You know kind of pretty much as I was anticipating on Sunday because from a calendar perspective It is pretty quiet. There's nothing really here So so typically on this calendar Monday through Friday I would normally highlight or bold important economic events and really there isn't too much in my mind and a development of what we've seen particularly With the the spreading of the virus I think absolutely takes top of the agenda in the kind of macro themes at least for the short term until We see how this plays out So going through what have we got? I'll just give you some summary of highlights President Trump is in India today So just in case you're looking out for any further tweets that might come out from him in terms of the data for today The main thing that people will be looking at is the German iPhone business climate could be quite interesting just because that generally speaking this is the Companies on the ground. What do they think about the current? Economy and their future expectations of the German economy and that of course has been a real pressure point on the Eurozone's Economic performance of late so that could be interesting just given their reaction to the to the virus then Tuesday Yeah, as I said, I mean there's a couple of things to look out for you've got US consumer confidence Again, has that been dented by the virus? I would probably think not from an American consumer perception At least not just yet But things like Richmond Fed manufacturing activity could be interesting to watch and then you do have Feds Clarida cap plan and actually if you think about the week as a whole from a speaker's point of view Today, you've got Bank of England's Haldane. You get Bank of England member cunliffe speaking a couple times throughout the week You've got ECB president Lagarde on Wednesday You got Fed officials pretty much every single day Actually, what I think is going to be quite important rather than focus on data It's going to be what the central bankers have to say now that we're starting to see more Concrete impact of the effects that the virus is having on the speed of the global slowdown and to what then Impact is that going to have on their decision-making for future monetary policy now? I wouldn't be looking for real clear forward guidance in that, you know This is going to this is what we're going to do and this is when we're going to do it But any increasing signs of dovishness from these senior Policy makers as per what we've kind of heard from the G20 finance ministers in Riyadh at the weekend's meeting This idea that they're ready to take action if the virus slows down the global economy Again, we'll probably have some impact in the rates environment and where people's perceptions are for further easing from global central banks So I think actually speeches are quite key this week over data in that sense Elsewhere the EU UK negotiation mandate agreement deadline is tomorrow now. What does that mean? I mean it sounds a lot more Interesting than it actually is basically at this point I haven't actually started negotiations hence this whole debacle over the last two weeks about red lines and so on It's supposed to be they've set the mandate for the negotiations which formally commenced then going from Wednesday onwards is what that means So this shouldn't really cause any reaction in the pound It's about what happens over the coming weeks, which will be key Wednesday again pretty quiet Nothing too much speakers though as I said Christine Lagarde feds Kaplan kashkari speaking Actually from a data point of view, it's very much Thursday Friday where things pick up and from earning season perspective That's all but done now. So that's not really so much of a consideration from an overall top-level macro perspective. So Thursday Couple things from the US. You've got the preliminary US GDP number durable goods orders Pending home sales coming out then on Friday You get some GDP figures coming out from different European countries You've also from the US got Chicago PMI Michigan consumer sentiment And then on Saturday what actually could be interesting and for any new traders This is quite normal China tends to release economic data at the weekend and on the weekend We've got the Chinese manufacturing non manufacturing PMI data So that will be definitely one that could then be interesting with updates in the virus for the open this time next week All right, I'll get Sam over otherwise that is pretty much it from me I'm going to share this link again if you want to have access to that full calendar. It's in the chat room now I did send it out as well this morning So that you can have a look at All right, let me have hand you over to Sam and I wish you a good week ahead Yeah, hi guys and good morning. I hope we've all had a good weekend Watching the rugby and Arsenal win, of course, so all is well here Let's have a quick look over US equities, which, you know, along with gold are going to be the the thing And bonds that catch people's eyes and we put the S&P might as well start back on a Daily chart and if we were to get some, you know Continuations to the downside where could be some some key levels to bring into picture Of course when we do move lower, it's always worth bringing on the the 200 day moving average So let's just have a quick look at that. We were of course famously very very far away from it We still are but you just never know and maybe over the next few days something just to keep an eye on that as you can See here trading quite a way below here, of course trend lines as well and on previous lows Best to have those marked up. You can see we're sort of going through to a few of these points now and Breaking through although, of course, this wouldn't necessarily be one but maybe worth keeping an eye on that Quite a lot of support. You would you would argue just a fair bit below here You can see around 32 37. We spent a lot of time around this point Let's just bring that into picture here. So that would be an area. Perhaps it will get dragged towards and also You know if you could let me just remove that trend line there Let's get this previous trend channel on not for the bottom part, but more just for the the top now I don't necessarily think we get here But if we were you can see around 3100. I know it's a long way away I'm not trying to scare the market whatsoever, but just a retest of that trend line You can see since we broke through that would be a lot of place You know, I would absolutely love to get involved To to get potentially a long as well also, maybe just a bit below you can see here This would be maybe Where I would favor, you know, at least a brief pause should we get down there the low the 7th or beginning of January What's that on the on the 8th and then the last sort of couple of days there and that coming in around 32 50 To the upside and let's put this more back on a 60 minute Of course as we go through the week There could well be some comments from the Fed or the corona virus seems more positive And we have to start thinking about that gap fill as well So always have that marked on if we just scoot back to previous days You can see they have or well, yeah in recent times They have got filled Relatively quickly even when we have been down quite significantly So of course have that on there as well and you know the 15 minute today It could well be some, you know buying pressure that comes in albeit briefly and just keep an eye on any of those previous loads 32 81 hasn't really been tested since we broke through on the European Open So of course keep a watch on that as well as a guide for today How is there any trend lines that's something you're gonna want to be looking to keep on for example This one here that started albeit quarter past two You can see has found resistance on the quarter to five and then just around seven o'clock as well You know if we were to get back above there then we could see maybe a quicker move as people that are holding shorts Sort of say okay now's not the time for us to get in this trade at the moment You've got to be I would say looking to go short unless something like that breaks through similar across the board for the Dow And then that's that as well just keep an eye You know for example Dow Jones daily chart are there any trend lines that I need to be aware of Where's the next levels of support and you can see here you've got that one which is similar to the S&P But starting on the 3rd of December and then 3rd of February and you can see put this now into 15 minute We're literally just about to come back and test that now So if I was short the Dow while I think we probably do go lower What better place to take a bit of that trade off on that potential trend line as well gold of course pushing higher Not far from it spike this morning So again resistance wise and then you start thinking well hang on we've got gold resistance. He got gold Equity support from these trend lines. Maybe it's not a bad place for a breather or continuation Of course if it breaks through I wouldn't necessarily be looking to sell gold here And I wouldn't necessarily be looking to buy the Dow on those trend lines But what better place to you know, just risk de-risk a bit of that trade 15 minute or five minute Just to look at potential areas to get back in you can see we did break through this little area resistance Finally, you know on that sort of confirmation We did find support and the follow through so any of these previous highs just keep a watch on that It'll be interesting of course to see what will happen if we do push through all of this That's high that we had today and then you know 1700 may well just be that magnet that does get here on the weekly chart certainly for the futures just before 1700 you've got a lot of highs going back from the end of December 2012 and then the beginning of 2013 I've drawn that that horizontal line as sort of rough as I can but you can see here a lot of resistance Just before 1700 so just keep an eye on that if you're thinking okay Well, let's get that big round number come out a bit before would be my advice oil as well You know, this is a market that's come under pressure all year off Coronavirus headline so it's going to do the same worth putting the weekly time frame on this one as well just because the Trend from those lows that we had back in 2016 you now not too far away from that coming in we put it back on to the 60 minute Just as a bit of a guide should that go and then the lows that we broke through early trade for me That's a good guide. I think as long as we're below there You've got to favor the short but we are just finding a bit of or potentially going to find a bit of support around 5150 which is acted as quite a good level of support in recent Days for for oil when it's been around there, but break of that low around there down to 5150 Half-dollar handle just a bit below that getting those pivots on and like I said that trend line for me is the guide for any move to the upside if it's going to happen and I well, I don't think that will so you know something like Various below Will be a very short-term bullish above perhaps be the way I'd look at it But again, let's say we get some positive comments with all we've got to start thinking about OPEC You know they if we start getting below 50 again our comments going to come out most likely So again these gaps just always keep an eye on those Bonds let's have a look at US 10 year get the weekly of course as we know It's that the highest it's been just like gold for quite some time This has removed those pivots there draw some horizontal lines up again You've got some resistance coming up But here you're talking first time since August and summer of 2016 levels to potentially get in here I know it's obviously going vertical at the moment But any of these previous highs as a potential guide, you know again to Favour if we can see any bit of a pullback to get in long off those But the markets are heavy at the moment So I wouldn't be looking to be the hero and buy the dip right now Unless you have some comments there to really back that up Quick look over the currencies euro approaching It's pivot. Let's have a quick look at that there. You can see just a bit under the pivot There's some nice resistance. We've just been tested She can see the first test offered a level where the sellers came in was the previous low overnight And then again through there then you start talking about maybe this gap coming in the dollar did strengthen in Early trade but it is coming down a touch a Lot of support on this level for the euro as we know is such a Historical area to keep a watch on I think today focus should really be on equities and Gold and maybe oil as well currency land might take a bit of a back foot here As we're just seeing equities Across the pond take another leg lower the Dax that's bring this in now, which you can see is down 426 points and You know, I think you'd be brave here to even think about trying to call dips But obviously with with price moving like this You want to be able to take profit because it can reverse very quickly So let's get a trend line on there from that August low see if we've got anything coming up shortly You can see not too far away a potential trend line You know if we if we go back to August 2019 that low there you can see the reaction we came through there the beginning of Jan Why can't it happen again? That should be your your for process here And as we draw a horizontal line on that area What better place to de-risk part of that position around 13,100 it makes sense to me anyway But for the Dax, you know these and that now trend line that I drew on if they go well Yes, the continuations things going through gold 1700 tea notes now let levels not traded for four years So it could get it could well get ugly But I would just be very careful about trying to sell the bottom or buy the top on these markets Have patience, you know, it's only 830 on a Monday. There's plenty of opportunities to come Today and throughout the week as well any questions as usual, please do let us know to see gold is testing the All-time high on the against the pound. We've seen another leg lower here in equities got the Dax coming to that level now And I imagine a lot of you will want to be looking at potential trade opportunities So I'll let you all crack on hope you'll have a good trading week and look at that You've already seen a little bounce there of 20 points off that trend line for the Dax